Walmart, Home Depot Lead 10 Companies Announcing Annual Dividend Increases In February 2H

This is the latest in my series of articles where I provide predictions of annual dividend increases for long-term dividend growth companies. At the end of January, I provided predictions for 20 dividend growth companies that have historically announced annual payout increases in the first half of February. In this article I’ll look at another 10 dividend growth companies that I expect will announce their annual dividend increases in the second half of the month.

Before I get to that, I want to note some other companies with a history of dividend growth that also announced annual dividend increases in the first half of February:

– Coca-Cola Company (KO) announced its 62nd annual dividend increase to a new annual rate of $1.94. The 5.4% increase gives the beverage company a forward yield of 3.27%.

– Tractor Supply Company (TSCO) announced a 6.8% increase for its 15th year of dividend growth. The new annual rate of $4.12 gives the agricultural supply company a forward yield of 1.74%.

– Biopharmaceutical company Gilead Sciences (GILD) extended its dividend growth streak to 9 years with a 2.7% boost to an annualized $3.08, giving the company a forward yield of 4.30%.

– Telephone and Data Systems (TDS) completed a half-century of dividend growth with a 2.7% increase to 76 cents. The telecommunications company now has a forward yield of 5.41%.

– CSX (CSX) announced a 9.1% increase for its 20th year of dividend growth. With an annual dividend of 48 cents, the railroad has a forward yield of 1.31%.

– Finally, automotive parts distributor Genuine Parts Company (GPC) extended its dividend growth streak to a remarkable 68 years with a 5.3% boost. The company now has a forward yield of 2.80%.

Here are the results from my predictions from the first half of February (the original predictions are available here), followed by my predictions for the dividend increases that I’m expecting to be announced in the second half of the month:

(All yields are based on stock prices at the market close on Friday, February 16th.)

Results for Dividend Increase Announcements from the First Half of February

Analog Devices, Inc. (ADI) – 21 years of dividend growth

Prediction: 4.7 – 5.8% increase to $3.60 – $3.64

Actual: Deferred to second half of February

The chip manufacturer should announce its next annual dividend on the 20th, the day before it reports earnings.

Allegion plc (ALLE) – 11 years

Prediction: 14.4 – 17.8% increase to $2.06 – $2.12

Actual: 6.7% increase to $1.92

Forward yield: 1.45%

The security company begins its 2nd decade of dividend growth with a smaller-than-usual increase.

Avista Corporation (AVA) – 22 years

Prediction: 4.4 – 5.4% increase to $1.92 – $1.94

Actual: 3.3% increase to $1.90

Forward yield: 5.66%

Utility Avista’s dividend increase this year was below the company’s 4% average compounded growth.

Church & Dwight Co., Inc. (CHD) – 28 years

Prediction: 3.7 – 5.5% increase to $1.13 – $1.15

Actual: 4.1% increase to $1.135

Forward yield: 1.16%

The owner of the Arm & Hammer brand broke its streak of 4-cent annual increases, but only barely – this year’s increase is 4 1/2 cents.

Cisco Systems, Inc. (CSCO) – 14 years of dividend growth

Prediction: 3.8 – 7.7% increase to $1.62 – $1.68

Actual: 2.6% increase to $1.60

Forward yield: 3.30%

This is the 2nd straight year of sub-3% dividend growth for Cisco.

Quest Diagnostics Incorporated (DGX) – 14 years

Prediction: 7.0 – 8.5% increase to $3.04 – $3.08

Actual: 5.6% increase to $3.00

Forward yield: 2.42%

The medical diagnostics company’s latest increase is below its compounded growth rate of 9% over the last decade.

Eversource Energy (ES) – 26 years

Prediction: 5.2 – 7.4% increase to $2.84 – $2.90

Actual: 5.9% increase to $2.86

Forward yield: 4.86%

The New England utility maintained its 6% dividend growth rate.

Exponent, Inc. (EXPO) – 12 years

Prediction: 3.8 – 7.7% increase to $1.08 – $1.12

Actual: 7.7% increase to $1.12

Forward yield: 1.43%

Last year’s increase was 8.3%; dividend growth continues to decline at the engineering consulting firm.

Corning Incorporated (GLW) – 13 years

Prediction: 3.6 – 5.4% increase to $1.16 – $1.18

Actual: 0% increase to $1.12

Forward yield: 3.51%

The 18% drop in EPS forced the manufacturer of electronics display glass to skip or just possibly delay its dividend increase this year.

ITT Inc. (ITT) – 12 years

Prediction: 10.3 – 13.8% increase to $1.28 – $1.32

Actual: 10.0% increase to $1.276

Forward yield: 1.03%

Just missed my prediction… I had anticipated a return to double-digit dividend growth but expected a slightly larger boost from the diversified manufacturer.

Jack Henry & Associates, Inc. (JKHY) – 35 years

Prediction: 3.8 – 5.8% increase to $2.16 – $2.20

Actual: 5.8% increase to $2.20

Forward yield: 1.28%

The supplier of technology solutions for banks and credit unions announced a sixth year of 12-cent annual dividend growth.

3M Company (MMM) – 66 years

Prediction: 0 – 0.7% increase to $6.00 – $6.04

Actual: 0.7% increase to $6.04

Forward yield: 6.62%

The industrial conglomerate got clobbered when it announced earnings in late January due to settlements of two major lawsuits. Until the company gets past the lawsuits, investors will see minimal dividend growth from 3M.

NextEra Energy, Inc. (NEE) – 30 years

Prediction: 7.0 – 9.1% increase to $2.00 – $2.04

Actual: 10.2% increase to $2.06

Forward yield: 3.61%

The owner of Florida Power & Light kept up its 10%+ dividend growth.

NorthWestern (NWE) – 20 years

Prediction: 0.8 – 2.3% increase to $2.58 – $2.62

Actual: 1.6% increase to $2.60

Forward yield: 5.32%

The continued drop in EPS is limiting dividend growth from the utility.

Public Service Enterprise Group Incorporated (PEG) – 13 years

Prediction: 1.5 – 3.0% increase to $2.72 – $2.76

Actual: 5.3% increase to $2.40

Forward yield: 4.01%

Despite not meeting EPS growth objectives, the northern New Jersey-based utility continued its record of 5% dividend growth.

PepsiCo, Inc. (PEP) – 52 years

Prediction: 7.5 – 10.3% increase to $5.44 – $5.58

Actual: 7.1% increase to $5.42

Forward yield: 3.26%

PepsiCo’s dividend increase this year was consistent with its long-term dividend growth rate.

Prudential Financial, Inc. (PRU) – 16 years

Prediction: 4.0 – 5.6% increase to $5.20 – $5.28

Actual: 4.0% increase to $5.20

Forward yield: 4.85%

This is the 4th year of 20-cent annual dividend increases for insurer Prudential.

The Sherwin-Williams Company (SHW) – 46 years

Prediction: 10.7 – 12.4% increase to $2.68 – $2.72

Actual: 18.2% increase to $2.86

Forward yield: 0.93%

The paint and coatings company’s latest increase beat its 5-year growth average of 16%.

T. Rowe Price Group, Inc. (TROW) – 38 years

Prediction: 1.6 – 2.5% increase to $4.96 – $5.00

Actual: 1.6% increase to $4.96

Forward yield: 4.56%

T. Rowe Price’s assets under management have been falling, reducing earnings and hence, dividend growth. This is the 2nd year of sub-2% dividend growth from the investment manager.

United Parcel Service, Inc. (UPS) – 15 years

Prediction: 5.6 – 6.8% increase to $6.84 – $6.92

Actual: 0.6% increase to $6.52

Forward yield: 4.39%

The economic slowdown took its toll on UPS’s dividend growth.

Xylem Inc. (XYL) – 13 years

Prediction: 12.1 – 15.2% increase to $1.48 – $1.52

Actual: 9.1% increase to $1.44

Forward yield: 1.16%

The water technology company continues to reward investors despite slowing dividend growth.

Predictions for Dividend Increases in the Second Half of February

There are 10 long-term dividend growth companies I expect to announce their annual increases in the second half of February. First, here are my predictions for two featured companies:

The Home Depot, Inc. (HD) – 14 years

The economic slowdown that is showing up in national data is impacting the home improvement retailer. With more than 2300 stores across the United States and its territories, Canada and Mexico, Home Depot provides insights into the spending habits of home owners across North America. And right now, it looks like homeowners are stressed and cutting back on spending. The company has slowly cut back on its earnings and sales guidance over the course of the year. In the first quarter, the company provided guidance of flat sales and a small earnings decrease. In its most recent quarterly earnings announcement, the company guided to a full year sales drop of 3 – 4% and an EPS drop of around 10%.

Although it’s been slowing recently, Home Depot continues to have a good dividend history. The company boasts a 5-year growth rate of 15% and a 10-year growth rate of 18%, and even the slowing dividend growth still meant that the company rewarded investors with a 10% increase last year.

In contrast to 2023, full year 2022 sales grew 4%, which drove EPS growth of 7.5% to a record $16.69. With a current dividend of $8.36, this gives Home Depot a payout ratio of 45%. Assuming EPS falls as predicted, the company’s payout ratio would jump to 55%, which is not uncomfortably high and gives room for another good dividend boost. In addition, Home Depot has enough free cash flow to have bought back 8% of its outstanding shares over the last 5 years. With these levels of free cash flow, Home Depot has room to extend its dividend growth history with a 10% boost like last year’s, although the increases will continue to slow.

Prediction: 7.7 – 10.0% increase to $9.00 – $9.20

Predicted Forward Yield: 2.48 – 2.54%

Walmart Inc. (WMT) – 50 years

The mega-retailer has seen flat earnings over the last few years but, during that time kept its dividend streak going with small increases. In fact, the company has grown its annual dividend by 4 cents each year over the last decade, giving Walmart a 10-year compounded growth rate of 2.0%. With vast resources available to it, the question is not whether the company will continue to boost its payout, but by how much. Will Walmart continue its record of 4-cent annual growth or reward investors with a larger increase this year?

Walmart continues to grow sales, although it seems much of that is from the effects of inflation. Fiscal 2023 sales were up 6.7% but cost of sales grew 8.1%, more than offsetting the increased growth. eCommerce growth continues to be a primary driver, growing at double digits year-over-year as comparable sales growth is in the mid-single digits. The company saw a similar phenomenon in the first three quarters of fiscal 2024, with sales up 6.2% but costs up 5.9%. The cost growth caused adjusted EPS to fall 2.6% in 2023 and reduced projected EPS growth in fiscal 2024 to 2.4%.

Earnings growth like this doesn’t support big dividend increases. Walmart will continue to use free cash flow to buy back shares (since 2019 the company has bought back nearly 7% of its outstanding shares) and will continue to keep its dividend growth streak going with small increases. Investors will likely see another 4-cent annual increase, with a small chance of a 6-cent increase to push the growth rate above 2%.

Prediction: 1.8 – 2.6% increase to $2.32 – $2.34

Predicted Forward Yield: 1.36 – 1.37%

Here are my predictions for the 8 other long-term dividend growth companies that should announce annual increases in the second half of February:

Company	# Yrs	Industry	Prediction (%)	New Annual Rate
Best Buy Co., Inc. (BBY)	20	Specialty Retail	2.2% – 4.3%	$3.76 – $3.84
After years of double-digit growth, the consumer electronics retailer’s dividend growth slowed last year to below 5% as sales dropped by 10%, cutting EPS by nearly 30%. Fiscal 2024 sales are expected to continue to decline by another 7% and Best Buy is guiding to another 13% decline in adjusted EPS. The company has room to grow its dividend again, but unless the decline in sales and earnings is reversed, Best Buy’s status as a dividend growth company is numbered. Look for another boost below 5%. Predicted Forward Yield: 5.10 – 5.21%
Essex Property Trust, Inc. (ESS)	29	REIT – Residential	4.8% – 5.6%	$9.68 – $9.76
West Coast-based apartment REIT Essex Property has consistently compounded its dividend by 4 – 6% annually, with the exception of 2021 as the company’s revenues suffered under the Government’s COVID rules. Essex Property posted good funds from operations growth of 11% in fiscal 2023 and is projecting another 7.5% growth in fiscal 2024. Investors can look for another 5% dividend boost from the REIT. Predicted Forward Yield: 4.11 – 4.15%
Leggett & Platt, Inc. (LEG)	52	Furnishings, Fixtures & Appliances	0 – 2.2%	$1.84 – $1.88
Bedding and automobile seat manufacturer Leggett & Platt is hitting a rough patch, with softness in residential sales more than offsetting gains in its automotive segment. Adjusted EPS was down 63% in 2023 and is expected to be down another 14% in 2024. With this driving the company’s payout ratio to well above 100%, investors can expect a small dividend increase at best and the possibility of the company skipping its boost this year. While a company with such a high yield indicates a possible dividend cut, Leggett & Platt’s 52-year run of dividend growth means that will be a last resort. Predicted Forward Yield: 9.29 – 9.49%
McGrath RentCorp (MGRC)	32	Rental & Leasing Services	6.5% – 8.6%	$1.98 – $2.02
The business-to-business company gets most of its revenue and profit from the rental of modular buildings. Business is good – after boosting EPS by 28% in 2022, McGrath Rental followed up with another 16% EPS growth in the first three quarters of 2023. After a minimal 2% boost last year, investors can expect the company to return to its usual 7 – 8% annual dividend growth rate. Predicted Forward Yield: 1.54 – 1.57%
Old Republic International Corporation (ORI)	42	Insurance – Diversified	2.0% – 4.1%	$1.00 – $1.02
The insurer tends to announce modest annual dividend increases in the 3 – 4% range, coupled with periodic special dividends that are larger than the regular dividend – roughly once a year since 2018. This policy gives the company flexibility to maintain a dividend growth history while still returning excess cash to its shareholders. Last year’s dividend boost of 6.5% was larger than usual for the company, but with EPS down about 6% in 2023, investors will likely see a slightly smaller increase. Predicted Forward Yield: 3.52 – 3.59%
Silgan Holdings Inc. (SLGN)	19	Packaging & Containers	8.3% – 11.1%	$0.78 – $0.80
The container and dispensing products company has a good dividend growth history, compounding its payout by 10% annually over the last decade, powered by continuing earnings growth. After soaring high, the company’s revenues and earnings hit an air pocket in 2023, with adjusted EPS down 15% on sales weakness. Will the company be able to keep up its dividend growth rate? Well, Silgan has embarked on a cost-cutting program and posts a payout ratio of 21%, even after the drop. This bodes well for another 10% boost. Predicted Forward Yield: 1.77 – 1.82%
SpartanNash Company (SPTN)	13	Food Distribution	2.3% – 4.7%	$0.88 – $0.90
Food distributor SpartanNash is going through a rough patch right now, with adjusted EPS down 6% in 2023 and projected to be down another 9 – 10% in 2024. SpartanNash’s dividend growth last year was less than 3%, well below the company’s 9% compounded growth rate over the last decade. Investors will see another year of substandard dividend growth. Predicted Forward Yield: 4.25 – 4.35%
Sempra (SRE)	20	Utilities – Diversified	2.9% – 4.2%	$2.45 – $2.48
The Southern California energy infrastructure company recently reaffirmed its long-term EPS growth rate of 6 – 8%, along with announcing that it expects full year 2023 adjusted EPS to be at or above the high end of the guidance it had previously provided. Unfortunately, this represents 2 – 3% adjusted EPS growth and not the 6% the company aims for. This means that investors can expect another dividend increase like last year’s 4% boost. Predicted Forward Yield: 3.48 – 3.52%

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Summary

There was a boatload of companies that announced annual dividend increases in the first half of February. In addition to the 20 companies for which I provided predictions, six other companies announced increases as well. Among the significant increases were an 18% boost from paint company Sherwin-Williams, a 7% boost from PepsiCo, and double-digit boosts from NextEra Energy and ITT. Two other companies continued their march to 70 years of dividend growth – 3M extended its streak to 66 years with a tiny increase and Genuine Parts Company announced its 68th year of dividend growth with a 5% increase.

On the downside, UPS’s latest increase was below 1% and Corning skipped its annual dividend increase entirely. Corning has until the end of the year to boost its dividend to extend its growth streak to 14 years.

Things slow down in the second half of the month, with only 10 long-term dividend growth companies expected to announce increases. Notably, Home Depot is expected to announce a high single-digit increase, and Walmart should start its second half-century of dividend growth with a 2 – 3% increase. Most of the other increases will be in the mid-single digits, with the possible exception of Silgan Holdings, which could announce an 11% boost. Finally, there’s a decent chance that furniture company Leggett & Platt will skip its annual increase right now as it deals with a drop in business. And while it’s unlikely, it’s possible that the company could cut its dividend after 51 years of growth to preserve cash. We should find out in the third week of February.